3PL firms emerge as largest occupiers of India’s warehousing space

Mumbai: Third-party logistics (3PL) firms have emerged as the largest occupiers of warehousing space in India as companies increasingly outsource logistics operations amid the growth of e-commerce, expansion in manufacturing and the need for more efficient supply chains.

The trend is being driven by companies increasingly relying on specialised logistics providers for warehousing, inventory management and distribution. E-commerce, retail, engineering and industrial manufacturing together account for more than two-thirds of contract logistics portfolios among major 3PL operators.

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The 3PL segment has remained the largest occupier in India’s warehousing market since 2021, accounting for 28-42% of gross absorption during the period. It has cumulatively absorbed more than 110 million sq ft between 2021 and the first half of 2026, including 11.1 million sq ft in the first half of this year, showed JLL India data.

“India's 3PL sector consistently captures the highest share of gross warehousing demand, thus establishing itself as one of the market's most consistent growth engines…This is about India's manufacturing and logistics sector becoming globally competitive through strategic infrastructure investment that supports automation, sustainability, and technology integration,” said Yogesh Shevade, Managing Director, Industrial & Logistics, India, JLL.

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The growing role of 3PL operators is also changing the nature of demand for warehousing real estate, with companies increasingly seeking larger and higher-quality facilities. Warehouse location, building specifications and operational efficiency are becoming more important factors in real-estate decisions.

“The growth of 3PL-led warehousing reflects the growing trend among companies to achieve scalability in a competitive market scenario. Multi-tenanted warehousing space has become an emerging theme, as it helps consultative logistics players address fluctuating market demand and avoid concentration risk,” said Ketan Kulkarni, MD & CEO, Allcargo Logistics. “We are seeing customers increasingly look beyond warehousing space towards integrated solutions spanning inventory management, distribution and technology.”

Grade A facilities accounted for 50% of 3PL and logistics absorption in 2021, rising to 57% in 2025. In the first half of 2026, Grade A facilities accounted for 53% of the segment’s absorption.

Average transaction size increased 25% from 100,000 sq ft in 2021 to 125,000 sq ft in 2025. The average transaction size for Grade A facilities was higher at 145,000 sq ft in 2025, indicating a shift towards larger facilities as 3PL operators consolidate and expand their networks.

The increasing preference for better-quality warehouses is also supporting rental growth. Overall rents for 3PL facilities rose at a compound annual growth rate of 3.9% between 2021 and 2025 to Rs 21 per sq ft. Grade A rents increased at a 4.9% CAGR during the period to Rs 23 per sq ft and rose further to Rs 23.7 per sq ft in the first half of 2026, up 7.7% from a year earlier.

According to experts, warehouses are increasingly being viewed by 3PL companies as an enabler of supply-chain performance, with better locations and specifications helping improve transportation costs, inventory productivity and service levels. They expect multi-client logistics parks to gain further traction as 3PL operators seek greater flexibility and scalability amid rising warehouse rents.

Delhi-NCR, Mumbai Metropolitan Region, Bengaluru, Pune and Chennai remain key logistics markets, while Tier-II and Tier-III cities are gaining importance as operators establish distribution centres closer to consumption centres. Nagpur, Lucknow, Jaipur, Coimbatore and Guwahati are among the emerging markets.

Most large 3PL operators continue to follow an asset-right model, with leasing preferred over ownership. Built-to-suit facilities are also gaining traction for specialised requirements such as automation-intensive operations, cold-chain infrastructure and customised logistics environments.